[OC] Why Electric Vehicle Adoption Is About To Go Through The Roof

I've had all of this in my head, so recently I decided to make a full post on it to lay out my case for why EV adoption is not only inevitable, but set to skyrocket in the not-too-distant future. Hopefully this might be interesting, especially for people that are new here or only occasional visitors. For the regular visitors here, I apologize if this seems overly-explanatory at times, I'm just trying to make sure I'm getting to everyone. So here it is.

Where Is EV Adoption Right Now?

Globally in 2017, EV sales totaled to 1,223,600 units according to EV-Volumes. This places EV market share at 1.3% of total sales. So far in 2018, market share is sitting around 1.7%. Obviously in the grand scheme of things, EV market share is still small, though improving.

Impediments To EV Adoption

The first thing we're going to take a look at is what is holding EV adoption from being higher. It's obviously a multitude of factors that contribute, but surveys (Appendix A) consistently show three reasons as being dominant to holding EV adoption back:

High sticker price compared to conventional vehicles

Range anxiety; due to a mixture of low vehicle ranges and lack of charging infrastructure

Misconceptions and lack of widespread information

It is my own opinion that the first two issues are greater in perception than reality (see reason #3); higher sticker prices are largely offset by lower running costs that people often fail to fully consider, and most people don't realize how much charging infrastructure exists or how little they typically drive until you own an EV. The third reason can be most obviously seen in a couple stunning statistics; like that 42% of people think that EV's can't go through a car wash, or that 82% of people believe an EV battery will require replacement within two years. Simply put, a huge portion of the population either knows absolutely nothing about EV's or has huge, negative misconceptions about them.

None the less, these are the primary issues holding EV adoption back, so I'm going to explore them - starting with price and range, since they're highly connected.

Electrical Vehicle Prices

Source For Range & MSRP: The Car Connection

To view the evolution of electric vehicle prices, I took 4 of the earliest available EV's and tracked them from their inception (2011 or 2012 depending on model) until present day. The good news is that all of them aside from the Tesla Model S (which was never designed to be affordable) did see a price decrease. The bad news? Not by much, and price decreases have been inconsistent. However, this is a lot better than it looks.

Electric Vehicle Ranges

Source For Ranges: The Car Connection

Now we see some pretty good improvement in their ranges over the last 7 years. The Nissan Leaf range has over doubled (from 73 miles in 2011 to 151 miles in 2018). The Tesla Model S came close to doing the same thing with a range that started substantially higher, going from 139 miles in 2012 to 259 miles in 2018. The Focus and Volt also saw significant increases in range as well.

Now, it's important to consider price and range improvements at the same time to get a full picture of how quickly EV's are progressing. For example, the Nissan Leaf dropped in price from $32,780 to $29,990 - but it also saw a large range improvement in that time-span as well that we should consider as well. To do this, I invented a very simple composite metric that can factor in price and range improvements so we can get a fuller picture:

MSRP / Range = Composite Score (Lower Is Better)

To help explain fully how the composite works, it's a very simple formula: Vehicle MSRP / Vehicle Range. The result is how many dollars each mile of EPA range costs in purchase price; meaning a lower score is better. As a quick note, this makes the Volt look worse than it deserves since it's the only plug-in hybrid, but the metric is meant to show improvement in individual models, not to compare them against each other ultimately.

Here, we are able to see the truly massive improvement these models have undergone. Here are the results in table form for ease of access:

Vehicle

First Model Year Score (2011 or 2012)

2018 Score

Nissan Leaf

449

199

Chevrolet Volt

1,151

627

Tesla Model S

413

288

Ford Focus Electric

516

261

The basic conclusion is that EV's have seen huge improvement the last few years; however, if you only look at price or only look at range, you will get a misleading picture of that improvement.

What Has Driven These Huge Improvements?

The answer is very simple; falling battery costs mainly.

Source: Bloomberg New Energy Finance

Battery costs are typically the largest cost in an EV. This is key to understand, because it creates a very important trade-off between the high sticker prices on EV's and solving range anxiety (reasons 1 & 2). Increasing an EV's range would typically also substantially increase it's price. In this case, as battery prices have been falling quickly, automakers have the option to either increase range, or to decrease the price. They have done both to some degree, but they have mainly chosen to increase range.

Range Anxiety

The increases in range have been to assuage concerns of range anxiety. However, range anxiety really has two parts to it: 1) the range of the vehicle itself, and 2) availability of charging options. We've already covered the increasing range of electric vehicles, but let's quickly explore the second part of that as well:

Fast Charger Growth In The US

Source: Recargo Data, Plugshare

So not only are EV ranges quickly increasing, but fast chargers are rapidly going up as well. This makes for a very exciting mix. At some point - between the increasing EV ranges and growth of public charging locations - range anxiety will become a thing of the past (Appendix B).

Why EV Prices Are Set To Start Falling

With increasing ranges and charging infrastructure, a larger portion of the public will be open to EV's. At this point, automakers will turn their attention to the price instead. It's at this point we should start to see prices of EV's fall fast, and adoption speed up even more.

Misconceptions & Lack of Information

In addition to the myths cited originally, there is a general lack of information for the vast majority of potential buyers. 52% of people say they couldn't describe what an EV is to someone else. Similarly, a BC Hydro survey found 90% of people believed they were unable to charge an EV at their home or work; indicating the vast majority of people aren't even aware a standard outlet can be used to charge EV's if needed.

I simply see these issues as largely self-solving. The crucial lack of EV knowledge is because there are so few EV's on the road so far. Many people have never had a serious interaction with an EV owner. As EV's continue to grow in popularity, EV knowledge will spread, causing even more people to become interested in them.

Appendix A

Surveys that support this include:

BC Hydro Survey from April 2018; cited too expensive as the most common reason (56% of people), and lack of range (39% of people) as the second most common reason.

Plug'N Drive Survey from May 2017; cited price as the number one reason (31% of people) followed by range anxiety (13% of people).

McKinsey & Company Survey from January 2017; cited purchase price as the first reason (25%), followed by range (24%) and charging availability (18%)

Appendix B

The caveat here is that I don't actually think a 500 mile range will be required for those people. As the general public becomes more aware of EV's and as charging infrastructure proliferates, I believe the required range for most people will settle somewhere more in the middle. Where exactly, I am not sure.

Kind of like how people think that because they sometimes carry large things, they need a truck. I've rented a pickup truck 4 times in the last year, and it cost me around $100 total. The rest of the year I save thousands not owning and driving a truck.

I super rarely go up to 80 miles in a day. I could easily rent an SUV for long family trips and still be ahead of the game by a lot.

If you're just hauling something from point A to point B, decent chance that's long enough. I've done that a handful of times.

For non-Zipcar users, both Home Depot and Menards (if you happen to be in its coverage area) have trucks you can rent for about $20 for 75 minutes. I bet others do too.

Edit: U-Haul is $20 for a day + $0.59/mile for a pickup or cargo van, at least where I am. A 10' moving van ups the mileage charge to $0.79, but the base is the same. That might serve your purposes too.

My work charges about $0.18/kwh for level 2 charging, but they offer free level 1 charging. I usually just plug into the level 1 outlet and that covers 3/4 of my round trip for the day. Once in awhile I'll use the level 2 charger, but it's rare.

I'm a Tesla superfan but I agree with this: expecting 15-30 min break every two hours is not common. I think that kind of break every 3 or perhaps 4 hours is much more common. I'm not saying what should happen; I'm saying what (I think) does happen.

One corollary: there are also a few people who pee in a cup and keep driving and driving and driving for 9 hours straight without a break (as /u/3_HeavyDiaperz does; see above). I don't have data on this, but I expect the percentage of people who do that are statistically very small - probably < 1%.

Conclusion: current generation of Teslas (in the 250-315 mile-ish range) are in the sweet spot for most people's needs. Again I don't have the actual statistics, but I expect the middle of the bell curve will be in or below that range. I have one of those vehicles and it lasts well longer than my bladder; I expect most have a similar experience in practice.

I agree 300 mi range is probably good enough. I still have a hard time with the idea of then taking a 30-45 minute break to recharge but I’m sure it’s not that big of a deal when you don’t have any other choice.

It should be much less soon. Tesla is releasing their faster V3 Supercharger by the end of the year, and obviously the 350kW charging networks are going up like crazy as well for CCS vehicles, with EV's soon to follow on that. I think it will be more like 10-30 minutes soon.

You likely already stop some for food, drinks, washrooms, etc. Yes, as /u/sp100d stated, there is a tiny minority of people who drive 10 hours straight and basically will do anything to avoid stopping, but the vast majority of people find they make regular stops anyways. If you're lining up these stops you would make anyways with your recharging, you'll likely find you just have to stick around an extra few minutes (especially considering the reduced charging times in point 1), so it won't actually be much of a difference in reality. With just a little bit of smart planning, you could likely find it causes a lot less disruption to your routine than you think.

Personal experience: I've been amazed at how refreshed I feel after a trip. Prior to Tesla I would arrive mentally sapped, but now I arrive buoyant. Part might be the occasional charge-stop, but I think a big part is autopilot. For whatever reason, wifey and I have way more enjoyment in our travels now that we drive Teslas.

If they can get it under 30 min it will be a non-issue for 95% of people. I could see someone who works as outside sales and travels around a specific region on a daily basis having a hard time making it work, but for most other people I think it would be a minor inconvenience that would be eclipsed by the benefits of everything else that a Tesla offers.

Ownership to me, implies total cost of ownership.. not just sticker price of the machine. Even though the argument could be that EV's will actually decrease in sticker price as well.

The average new vehicle can expect to retain 35.1% of it's original value after 5 years. So if an EV can retain 50% of it's original value, that would be a high resale value. This could be compounded by ICE dragging down the average resale value if demand for them plummets. And that could be occuring while an EV continues to drop in price.

But if EV's are anything like consumer electronics.. we don't see them drop much in price, we just get more for the buck. Typically they go up in price, something something inflation... but more GB's and MHz or millimeters. Is the 2019 Nissan Leaf cheaper than the 2018 Nissan Leaf?

But if EV's are anything like consumer electronics.. we don't see them drop much in price, we just get more for the buck.

I don't think I fully agree with this. Yeah, you can still buy expensive consumer electronics, but prices have still dropped. What's even more important is that the price of "good enough for most people" consumer electronics droped toooons.

You can get a MacBook for $1,300 now. It won't blow away any benchmarks or do heavy gaming or anything like that, but it's only $1,300. The Mac Mini is only $500.

By contrast, the original Apple Macintosh had a price of $2,495 -- almost $6,000 inflation adjusted. The original Apple II started at $1,298 in 1977, a little over $5,000 today. The original IBM Personal Computers were in the same general ballpark. The original PowerBooks and ThinkPads were in the $4K ballpark. Even the original iMac was $1,300 at the time ($2,000 now).

There were a couple cheaper machines available then. The Commodore 64 was $595, $1,551 inflation-adjusted. But those were a lot less capable machines relative to the above than a Mac Mini is compared to a Mac Pro when viewed for most people's needs, and yet it was still three times the cost of the Mac Mini today, inflation-adjusted.

You can still spend $4K or $5K on a computer (the 8-core Mac Pro starts at $4K), but if you gave that to most people they wouldn't make use of that extra power. The cheap options are "good enough."

I think it's sort of the same with EVs. Nissan is improving the Leaf's range instead of giving you a shorter-range leaf because it's not yet "good enough" for most people (see the survey results at the end of OP's comments). At some point, it'll be there, and after that, then the price for a "good enough for most people Leaf" will start to come down in price even if they continue to offer a much longer range version (analogous to the Mac Pro) that'd only be needed by a select few. At least that's what I expect and hope to see.

Exactly. I started buying my own PCs in the 1990s. Not only were they extremely expensive, they were obsolete within 2 years. Today my several years old PC is still going strong and it was much less expensive. My laptop is 3 years old and I just can’t think why I’d change it. In the last couple of years, the same thing has happened to my phone and tablet.

So yes, once range anxiety is solved - say 250 miles - then prices will drop. But they’ll only drop to about ICE costs.